Russian gold gets around the sanctions

By Rhod Mackenzie

Gold mined in Russia, against the backdrop of a ban on imports into G7 and EU countries, has found new supply channels and is now being shipped to the UAE, Hong Kong and Turkey by dozens of small logistics companies and traders previously unknown to the industry at large
The sanctions did create major problems for Russia's large and important gold mining sector - its own market cannot absorb the estimated $20 billion of the metal mined each year. ( Russia is the world's second largest gold miner after China).
"Where before the sanctions gold used to be sent to London to the vaults of members of the LBMA (London Bullion Markets Association), which includes the world's biggest banks, now smaller and lesser-known companies have taken over the trade in Russian bullion.
The G7 and EU sanctions prohibit the import of Russian gold into their markets and also prohibit their companies from trading Russian gold elsewhere. But firms in other countries are still allowed to do so because of the lack of the imposition of secondary sanctions, so there is no reason to believe that any rules are being broken.

The global transport of precious metals is dominated by security companies such as Brink's Co. and Loomis, which stopped transporting Russian bullion after the start of a special operation in Ukraine. So the gap has now been filled by companies such as VPower Finance Security (Hong Kong), which says it moves cash and gold for some of China's biggest banks..

The UAE has become an important new destination for Russian gold. Most buyers are based in there as its home to the Dubai Gold and Commodities Exchange ( DGCX) which has long been the centre of precious metals trading between the East and West. Turkey it appears has become another important destination.

There have also been major changes in who is doing business in gold within Russia. The country's exports used to be dominated by large lenders such as VTB and Sberbank,but they have sanctions against them this has led to smaller banks taking control. The mining and refining companies also began to play an important role in supply chain.

According to the Russian Union of Gold Miners, the amount of gold mined in Russia in 2022 amounted to 330 tonnes.